U.K. car industry pulling away from European rivals

LONDON – Britain is accelerating away from its European competitors in the car-making sector, with investment flowing into the factories of Nissan and Jaguar Land Rover as Chinese and American demand drives sales.

Jaguar Land Rover said last week it will pump £1.5 billion ($2.4 billion) into its plant in Solihull, near Birmingham, creating 1,700 jobs and giving a welcome fillip to industrial central England. The Solihull plant will make new lightweight Jaguar and Land Rover models made of aluminum.

In northeastern England, Nissan has been granted permission to extend its already vast plant in Sunderland, securing jobs in an area where major employers are in short supply.

The investment decision was announced at the Frankfurt Motor Show by Jaguar Land Rover Chief Executive Officer Ralf Speth, who said that it was “further evidence of our commitment to advancing the capability of the U.K. automotive sector and its supply chain.”

Jaguar Land Rover now employs 11,000 people in Britain, with another 24,000 employed in its supply chain.

Joe Rundle, an analyst at ETX Capital, credited the British government with reviving an industry that once looked close to extinction.

“The U.K. auto-making industry was considered a dying sector as car factories produced high volume motors by low-skilled manufacturing,” he said. “However, the U.K. government’s initiatives to kick-start manufacturing activity is turning the country’s auto-making industry into one of premium niche manufacturing.”

In March, the government announced that it was pumping £500 million ($800 million) into the auto sector.

Demand from China and the recovering U.S. economy are credited with driving sales.

Toyota, Nissan and BMW are among other carmakers injecting more and more money into top-of-the-range models made in Britain.

Nissan was granted planning permission this month for a 25,000-sq.-meter extension of its factory in Sunderland. The £250 million addition to the factory extension will produce models for its luxury Infiniti division.

In March, Nissan launched production of its fully electric Leaf with £420 million of investment, creating an additional 500 jobs in the process, proving that the Sunderland factory is bouncing back with a vengeance. In 2009, Nissan cut a quarter of the 5,000 workers there.

The rude health of the top-of-the-range sector is also underlined by the success of Rolls-Royce, which last year set record-breaking sales figures for the third year running with 3,575 cars made by hand. Rolls-Royce too is expanding its Sussex factory in southeastern England.

Not all the news is good. Late last year, Ford closed down production of its Transit van at Southampton on the southern coast with the loss of 1,500 jobs. And Honda shaved 800 jobs from the 3,500 workforce at its Swindon factory in southwestern England as Europe’s economic doldrums took their toll.